I don't envy WDI on this one. It's my understanding that opinions among Native American tribes very wildly on depictions in media, stereotypes, being referred to as "Indians", etc.
Peter Pan doesn't depict a specific tribe, so how do you change the scene in a way that doesn't offend any of the tribes? You can't, it's impossible.
I would have just left it as it was. Disney's made it a habit to proactively identify potential controversy and change it, which in turn creates more controversy than ever existed before. I have no doubt that if Magic Kingdom was operating today like it was in 2019, without any of the changes of the last five years, no one would be up in arms and overall guest satisfaction would be higher since Disney Parks are so mismanaged now.
And since everything WDI does these days has to have meaning, they wrote up a whole new backstory for this scene tying it in to a real world Native American ceremony. Which to me seems a bit over the top, especially when the root problem (if it can even be called that) remains- this is off putting to some Native Americans.